Decree No. 92/2018/ND-CP dated June 26, 2018 of the Government on managing and using the Accumulated Fund for Debt Repayment

DECREE

ON MANAGING AND USING THE ACCUMULATED FUND FOR DEBT REPAYMENT

Pursuant to the Law on the Government Organization dated June 19, 2015;

Pursuant to the Law on the State Budget dated June 25, 2915;

Pursuant to the Law on Public Debt Management dated November 23, 2017;

According to the request of the Minister of Finance;

The Government hereby promulgates the Decree on managing and using the Accumulated Fund for Debt Repayment.

Chapter I

GENERAL REGULATIONS

Article 1. Scope of adjustment

This Decree specifies the establishment, management and use of the Accumulated Fund for Debt Repayment.

Article 2. The Accumulated Fund for Debt Repayment

1. The Government establishes the Accumulated Fund for Debt Repayment and assigns the Ministry of Finance to manage it in accordance with Article 56 of the Law on Public Debt Management on the basis of the Accumulated Fund for Debt Repayment established under the provisions of the Government’s Decree No. 79/2010/ND-CP dated October 14, 2010.

2. The Accumulated Fund for Debt Repayment (hereinafter referred to as Fund) is a non-state budget financial fund.

3. The Minister of Finance appoints and assigns the Finance Ministry s public servants to act as the account owners, the chief accountants (or in charge of accounting) and assign a number of public servants to perform the task of Fund management according to the plurality regime.

4. The Fund is eligible to open a transaction account in foreign currency and Vietnamese currency at the State Treasury and domestic commercial banks.

5. The Fund performs accounting according to the provisions of law on accounting. Foreign currency conversion into VND is subject to the accounting rate announced by the Ministry of Finance (or an authorized agency). The Minister of Finance promulgates the accounting regime applicable to the Accumulated Fund for Debt Repayment.

Article 3. Subjects of application

1. Ministry of Finance.

2. On-lending authorized agency.

3. The sub-borrowers of the Government s foreign loan capital; guaranteed borrowers.

4. Relevant agencies, organizations and individuals.

Article 4. Principles of managing and using the Accumulated Fund for Debt Repayment

1. To ensure publicity, transparency and compliance with the provisions of law; ensure safety, liquidity and efficiency in the management and use of the Fund s capital sources.

2. To associate the Fund management with the public debt management, ensure solvency of debt obligations of on-lending loans and handle risks arising from on-lending, government guarantees.

3. All expenses from the Accumulated Fund for Debt Repayment shall be subject to the decision of the competent authority, the foreign loan agreement, the contracts signed between the Ministry of Finance and the party receiving capital from the Fund, depending on the nature and characteristics of each expenditure specified in this Decree.

Article 5. Ensuring the Fund s foreign currency source

1. Based on the Fund s foreign currency receipts and expenses, the Minister of Finance shall make decision on the reconciliation of foreign currencies for the Fund from the State budget s foreign currency fund in case the foreign currency receipt source does not fully satisfy the Fund s foreign currency spending needs.

2. When the Fund s foreign currency receipts do not ensure expenses in foreign currencies and the State budget s foreign currency fund does not have enough foreign currency sources for payment, the Fund shall purchase foreign currencies from the State Bank of Vietnam or from commercial banks to maintain the source of foreign currency at least equal to Government’s one foreign debt repayment period in the fiscal year. The Minister of Finance shall make decision on purchasing foreign currency from commercial banks.

3. The State Bank of Vietnam shall have to ensure the balance of foreign currencies for the Fund on the basis of the proposal of the Ministry of Finance.

Article 6. Duties, powers and responsibilities of relevant agencies and organizations in Fund management

1. Duties and powers of the Prime Minister:

a) To make decision on the use of the Accumulated Fund for Debt Repayment to handle risks for on-lending amounts and government guarantees in accordance with Clause 4, Article 14 of the Law on Public Debt Management, including decisions on receiving advance capital, value of the advance capital, interest rate of the advance capital, time of advance capital repayment.

b) To make decision on the moratorium of the advance capital or the restructuring of the advance capital. To make decision on the use of the Fund to handle arising risks, including write-offs of principal, interest, penalty interest, and change of the advance capital interest rate when the recipient of the advance capital faces difficulties due to force majeure.

c) To make decision on the deduction of part of the guarantee fee, the on-lending fee and regulate the management and use of the funds deducted from the guarantee fee, the on-lending management fee for the public debt management operation.

2. Duties and powers of the Minister of Finance

a) To organize the management and implementation of receipts, expenses and use of the Accumulated Fund for Debt Repayment according to the provisions of Clauses 3, 4, 5, Article 56 of the Law on Public Debt Management and the provisions of this Decree.

b) To report to the Government in order that the Government reports to the Standing Committee of the National Assembly, the National Assembly on the situation of receipts and expenses, debt repayment obligations, the reasons that the Fund does not have sufficient resources to pay debts, proposal of solutions according to regulations of law on the state budget in case the Fund does not have sufficient resources to pay debts after applying risk treatment measures in accordance with the Law on Public Debt Management.

c) To make decision on extension of advance capital recovery in case the obligor has difficulty in debt repayment in accordance with the Government s Decree on provision and management of government guarantees and the Government s Decree on the on-lending ODA and foreign preferential loans.

d) To report to the Prime Minister for consideration and decision on the moratorium and restructuring of advance capital loans when the recipient has difficulty in repaying debts according to the Government s Decree on grant and management of government guarantees, the Government s Decree on the on-lending of ODA and foreign preferential loans of the Government.

dd) To make decision on the selection of domestic commercial banks to make term deposit, entrust the Fund management.

e) To approve the annual plan of receipts and expenses of the Fund.

3. Responsibilities of relevant agencies and organizations:

a)The agency authorized to perform the on-lendingis responsible for urging and recovering the on-lending debt from the sub-borrower and promptly and fully repaying it to the Fund.

b) The sub-borrower is responsible for managing and using the on-lending capital for the right purpose, repaying the on-lending directly or through an authorized agency on time and in full.

c) The recipient of the advance capital is responsible for using the advance capital for the right purpose, repaying on time, fully due debt obligations to the Fund as per the agreement or advance principal contract. To fully and promptly periodical report to the Ministry of Finance in accordance with law. To comply with sanctions as prescribed by law and under the capital advance agreement in case of failing to fulfill related obligations.

d) The agency receiving and managing the Fund s temporary idle capital is responsible for managing and using the Fund s temporarily idle capital to ensure safety, law compliance, and repay principal and interest to the Fund fully and on time as agreed.

Chapter II

MANAGEMENT OF RECEIPTS AND EXPENSES OF THE ACCUMULATED FUND FOR DEBT REPAYMENT

Article 7. Receipts and expenses of the Accumulated Fund for Debt Repayment

1. Contents of the receipts:

a) Recovery of on-lending debt (including principal, interest, penalty interest and fees).

b) Collection of provisions against risks for on-lending.

c) Collection of on-lending management fee (the part enjoyed by the Ministry of Finance under the Government s Decree on the on-lending of official development assistance (ODA) loans and foreign preferential loans of the Government).

d) Guarantee fee and penalty interest on late payment for the guarantee fee (if any).

dd) Recovery of advance capital from the Accumulated Fund for Debt Repayment.

e) Collection from debt restructuring, debt portfolio operations.

g) Collection from interest of deposits, loans,capital management
entrustment charges and investments of the Fund.

h) Other lawful receipts.

2. Contents of the Fund s expenses:

a) Repayment of foreign debts (principal, interest), fees (if any) for the on-lending loans. In case the state budget has advanced sources to repay foreign debts, the Accumulated Fund for Debt Repayment is responsible for repaying the state budget for the amount repaid in advance.

b) Advance capital to repay foreign debts for on-lending loan or government guarantees under decisions of the Prime Minister.

c) Expenses for risk handling under decisions of the Prime Minister.

d) Expenses for public debt management operations from the on-lending management fee and guarantee fee according to the Prime Minister s regulations on the principle of not overlapping with the regular expenditure estimates guaranteed by the state budget.

dd) After balancing the use of the expenses specified at Points a, b, c, d, Clause 2 of this Article, the Fund may use the temporarily idle capital to lend to the state budget, invest in idle capital and purchase government bonds in accordance with the Law on Public Debt Management and this Decree.

Article 8. Planning the Fund s receipts and expenses

1. The Fund shall make annual plans on receipts and expenses and report to the Minister of Finance for decision as a basis for implementation.

2. The Fund s receipt and expense plans shall comply with the provisions of Article 9 of this Decree.

 Article 9. Contents of the Fund s annual receipt and expense plans

1. The Fund s annual receipt plan includes:

a) Planned recovery of on-lending debt (including on-lending management fee) according to the on-lending term of the on-lending contracts and annually, based on reports of the sub-borrower and the agency authorized to perform the on-lending on situation and plan of disbursement, debt repayment, on-lending outstanding loan.

b) Expected receipt of guarantee fees under the government guarantee issue agreements, based on the obligor s report on the situation and plans for disbursement, debt repayment, and outstanding loans guaranteed by the Government.

c) Expected receipts from debt restructuring, debt list restructuring, deposit interest, lending, capital management entrustment and investment, and other lawful receipts of the Fund in accordance with regulations.

2. The Fund s annual expenditure plan includes:

a) Expected state budget repayment plan that is built on the basis of the Government s foreign debt repayment plan for on-lending loans under foreign loan agreements.

b) Expected advance capital amounts from the Fund for government-guaranteed loans that have difficulty in repaying debts, debt restructuring projects, and debt lists approved by competent authorities.

c) Expected use of the Fund s capital resources (including expenses for public debt management operations) according to the decision of competent authorities.

3. For any change that affects the plan of receipts and expenses of the Fund in the course of implementation, the Ministry of Finance shall decide to adjust the plan of receipts and expenses of the fund accordingly, serving as a basis for implementation.

Article 10. Implementing receipts of the Fund

1. Loans to be recovered from on-lending loans, on-lending management charges, and the government s on-lending risk reserve shall be implemented as follows:

a) For on-lending loans through on-lending authorized agencies: Based on the on-lending authorization contracts, the on-lending agencies shall recover principal, interest, penalty interest and charges (if any), on-lending risk provisions from the on-lending sub-borrowers, after deducting part of on-lending management fee and on-lending risk reserve to which the on-lending agencies are entitled to enjoy and repay to the Fund in accordance with the Government s Decree on the on-lending of ODA and foreign preferential loans of the Government.

b) For on-lending loans authorized to state-owned banks for social policies to monitor debt collection: the state-owned bank for social policies shall recover principal, interest and fees (if any), on-lending risk provisions from the project on the due date of debt repayment as prescribed and consolidate debt collection and return to the Fund on a monthly basis after deducting the on-lending fee and on-lending risk provisions to which the state-owned bank for social policies are entitle to enjoy. The deadline to repay to the Fund is the 5th of each month for the recovery amounts of the previous month. At the same time, to send a detailed report on the recovery amounts of principal, interest, fees and late payment penalty interest of each project. For the December’s debt recovery amounts payable to the Fund before December 25, the official December repayment amount will be compared and remitted to the outstanding balance (if any) in January of the following year.

c) For on-lending amounts directly signed between the Ministry of Finance and the sub-borrower: Based on the provisions of the on-lending contract, the sub-borrower shall directly repay payable amounts (principal, interest, fees, on-lending management fees, on-lending risk provisions) to the Fund fully and on time.

d) In case the sub-borrower can only partially repay the due debt obligation, the order of priority for debt deduction shall be as follows: late payment penalty interest, overdue interest, due interest, overdue principal, due principal.

2. Collection of government guarantee fee: Based on the obligor s written commitment with the guarantee-issuing agency, the obligor shall directly pay the guarantee fee to the Fund. The payment of guarantee fees to the Fund complies with the Government s Decree on provision and management of government guarantees.

3. Recovery of the advance capital from the Fund:

a) The recipient of the advance capital shall return to the Fund the advance amount, including principal, interest, late payment penalty interest and fees (if any) in accordance with the advance capital contract signed between the Ministry of Finance and the party receiving the advance capital.

b) Within 10 days from the due date of the payment under the advance capital Contract or the signed agreement, if the Fund does not receive the repayment amount, the recipient must bear late payment penalty interest for the late payment amount. The interest rate for late payment is equal to 150% of the interest rate specified in the capital advance contract.

c) In case the advance capital receiving party can only partially repay a due debt obligation, the order of priority for debt deduction is specified at Point d, Clause 1 of this Article.

4. The deposit interests or interests from the Fund s temporary idle capital management entrustment shall be collected according to the specific provisions of the deposit contracts or entrustment contracts.

5. Other lawful receipts: shall comply with the provisions of law and approved by competent authorities.

6. The Fund shall separately account the Fund s receipts and expenses, and at the same time separately account the receipts and expenses from the on-lending risk provisions.

Article 11. Repaying to the state budget

1. Monthly, the Fund shall repay the state budget the foreign debt repayment obligations of the on-lending loans already paid in advance by the state budget to foreign creditors under the loan agreement (or loan contracts).

2. The time of the Fund s repayment to the state budget on the 10th of the following month at the latest, for December expected repayment, it will be returned to the state budget before December 30. The official payment for December will be collated and the balance (if any) shall be returned in January of the following year.

Article 12. The advance capital to repaying the debt on behalf of the obligor

1. The advance capital from the Fund to repay the debt on behalf of the obligor in the event that the obligor has temporary or long-term difficulties, is unable to fulfill the due debt obligations of the loan or loan of government-guaranteed bond issuance shall comply with a decision of a competent authority specified in the Government s Decree on provision and management of government guarantees.

2. The obligor, the parent company (if any) must sign a compulsory loan contract with the Fund management agency in accordance with the provisions of the Government s Decree on provision and management of government guarantees.

3. The obligor shall fully and promptly repay the due debt obligations to the Fund in accordance with the conditions in the advance capital contract signed with the Ministry of Finance. In case the recipient can only partially repay a due debt obligation, the order of priority for debt deduction is specified at Point d, Clause 1, Article 10 of this Decree.

4. During the compulsory loan term of the Fund, the obligor must fully comply with the provisions of the Decree on provision and management of government guarantees.

5. In case the obligor is in difficulty, is unable to pay due debt obligations to the Fund, based on a decision of a competent authority on debt moratorium and rescheduling for the obligor, the Fund management agency signs a contract or agreement with the obligor on the debt moratorium and rescheduling.

Article 13. Lending to the state budget

1. The Minister of Finance shall make decision on the use of the Fund s temporary idle capital to lend to the state budget. Term and interest conditions are decided by the Minister of Finance for each loan.

2. Based on the Finance Minister s approval on lending to the state budget, the Fund management agency shall sign the loan contract with the state budget.

3. The state budget management agency shall be responsible for arranging the full and timely repayment of the due debt obligations to the Fund in accordance with the provisions in the contract signed with the Fund management agency.

Article 14. Purchasing government bonds

1. The level of buying government bonds must not exceed 10% of the Fund s idle capital and must ensure the Fund s solvency.

2. The Minister of Finance shall decide the use of the temporarily idle source to buy and redeem government bonds for a term.

Article 15. Term deposits, capital management entrustment at domestic commercial banks

1. The Fund carries out term deposits, entrust the Fund s capital management at domestic commercial banks decided by the Minister of Finance in the rating list of banks provided by the State Bank of Vietnam (if any) or rated in term of prestige by an international credit rating organization.

2. The Fund s term deposit, capital management entrustment must ensure safety, liquidity and efficiency.

3. The Fund s profits from the use of temporary idle capital and the debt restructuring interests are accounted separately and used to supplement the Fund s capital source.

Article 16. Advance capital for the restructuring of Government’s debts and debt portfolios

1. The Fund shall advance the capital to restructure Government’s debts and debt portfolios and government-guaranteed debts under a scheme approved by a competent authority according to the provisions of Point c, Clause 4, Article 56 of the Law on Public Debt Management.

2. The capital advance of the Fund for debt restructuring of a government-guaranteed loan, on-lending of the ODA capital or foreign preferential loans of the Government shall comply with the debt structuring scheme approved by the
Government.

Article 17. Expenses for public debt management operations

The Fund shall deduct part of the guarantee fee and on-lending management fee to cover public debt management under the Prime Minister s decision.

Article 18. Managing the risks of the Fund’s operations

1. In case the Fund s source is insufficient for payment, expenses, the offset of the temporary source shortage shall be handled as follows:

a) Recovering in advance the term deposits at commercial banks.

b) Recovering capital management entrustments.

c) Selling out government bonds being held by the Fund (if any).

2. In the course of implementing the Fund s activities, in case of difficulties in recovering the advance funds, the Ministry of Finance shall formulate a settlement plan according to the prescribed regime. In case this is beyond the authority of the Ministry of Finance, the Ministry of Finance shall submit to the Prime Minister for decision or reporting to competent authorities for consideration and decision.

3. In case the Fund does not have sufficient resources to pay debts after applying risk handling measures as prescribed, the Ministry of Finance shall sum up and report to the Government for reporting to competent authorities for consideration and decision according to regulations specified in Clause 7, Article 56 of the Law on Public Debt Management.

4. The Minister of Finance shall make decision on measures to deal with shortages of the Fund s resources specified in Clause 1 of this Article.

Article 19. Expenses for handling risks of on-lending of ODA loans, foreign preferential loans and government guarantees

1. The Fund shall make expenses for handling risks of ODA on-lending loans or foreign preferential loans of the Government in the following cases:

a) Repaying foreign loans for on-lending loans during the on-lending moratorium period.

b) Repaying foreign loans for the on-lending items to be written off.

c) Debt settlement of Government-guaranteed projects.

2. The Fund shall make expenses from the Fund source according to the Decision of the competent authority on permitting the debt moratorium, debt write-off, debt settlement.

Chapter III

FUND REPORT AND AUDIT

Article 20. Reporting regime

1. Annually, or upon request, the Ministry of Finance shall report to the Government so that it shall report to the National Assembly, the Standing Committee of the National Assembly, the President on the management and use of the Accumulated Fund for Debt Repayment in the joint report on public debt according to the provisions of Point dd, Clause 1, Article 60 of the Law on Public Debt Management.

2. Annually, the Fund prepares reports on the Fund s operation and financial statements. The report preparation and approval time is at the latest before March 31 of the year after the reporting year.

3. Quarterly, before the 10th of the first month of the following quarter, the Fund shall make a report on the situation of receipts and expenses in the previous quarter, the Fund s balance and accumulated amounts from the beginning of the year.

4. On-lending agencies shall report to the Ministry of Finance monthly, quarterly and annually on the on-lending capital recovery, recovery of on-lending management fee, on-lending risk and Fund repayment according to each on-lending project. The reporting time limit is the 5th of the following month for monthly reports, the 15th of the first month of the following quarter for quarterly reports; and before January 31 of the following year for annual reports.

5. The Ministry of Finance shall give instructions on the form of reports on the situation of projects that the Accumulated Fund for Debt Repayment must be paid on behalf of; the situation of managing, using the Accumulated Fund for Debt Repayment.

Article 21. Data comparison

The Fund is responsible for comparing annual data with relevant agencies and organizations, including:

1. Comparing with on-lending agencies and direct on-lending receiving projects on the recovery amounts of on-lending loans.

2. Comparing with government-guaranteed loan projects on the guaranteed debt balance and payable and paid guarantee fees.

3. Comparing with the state budget the amount paid by the state budget for the Government s on-lending loans, the amount which the Fund has returned to the state budget.

4. Comparing with the units advanced or loaned by the Fund according to the provisions of this Decree.

5. Comparing with financial and credit institutions providing deposit services or entrusted asset management services for the Fund.

Article 22. Auditing the Fund

The Fund is subject to the State Audit s audit during the state budget audit or the subject audit on public debt in accordance with Article 18 of the Law on Public Debt Management.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 23. Effect

1. This Decree takes effect on July 1, 2018.

2. Decision No. 01/2013/QD-TTg dated January 7, 2013 of the Prime Minister on the establishment, management and use of the Accumulated Fund for Debt Repayment expires from the effective date of this Decree.

Article 24. Transitional provisions

1. Advance capital contracts, loan contracts, term deposit contracts, andinvestment entrustment contractsof the Fund signed before the effective date of this Decree shall comply with the provisions of Decision No. 01/2013/QD-TTg of the Prime Minister on the establishment, management and use of the Accumulated Fund for Debt Repayment.

2. Amendment and supplementation of capital advance contracts, loan contracts, term deposit contracts, and investment entrustment contracts of the Fund as prescribed in Clause 1 of this Article and signed after the effective date of this Decree shall comply with the provisions of this Decree.

3. For receipts and expenses related to public debt management operations, they shall comply with the Prime Minister s Decision No. 05/2016/QD-TTg of March 5, 2016 until new regulations are issued.

Article 25. Implementation provision

Ministers, Heads of Ministerial-level agencies, Heads of Governmental agencies, Presidents of People s Committees of provinces, centrally-affiliated cities, relevant businesses, organizations and individuals are responsible for the implementation of this Decree.